Infrastructure problems, title disputes plague affordable homes

MUMBAI: The affordable homes market, thriving on the outer fringes of Mumbai, is beset with problems like lack of infrastructure, poor transport connectivity, issues of land titles and delayed clearances.

In 2008, many developers who rode the real estate boom by catering mainly to high-income buyers started enticing lower and middle class clients with smaller properties outside Mumbai limits when the market slowed down. These locations are 60 to over 100 km from Mumbai. But they claimed to have registered brisk sales of smaller flats in places like Boisar, Virar, Panvel, Kalyan, Shahpur, Ambivali and Karjat. These homes cost anywhere from Rs 10 lakh to Rs 35 lakh.

But despite frenzied construction in these far-flung places, problems soon arose. Buyers realized that in several of these locations, there was barely any social infrastructure like schools, markets, hospitals and restaurants. Some projects are located 8-10 km from the nearest railway station. Builders too found that permissions from local civic bodies were inordinately delayed.

In Vasind near Shahpur, Tata Housing had to scrap one of its affordable homes projects because environmental clearances got stuck in red tape. In Karjat, only phase I of a large low-cost project by Tanaji Malusare City was completed. The remaining phases have failed to take off despite a huge initial demand.

Experts said that despite the slowdown in the property market, demand for affordable homes is eight to ten times more than luxury apartments. Shubhankar Mitra, head, strategic consulting (west), Jones Lang LaSalle India, said, “Anticipated supply in this segment is 50,000 to 60,000 tenements. Most of the supply comes from grade B and C developers offering flats in the range of Rs 2,500 to Rs 3,500 a sq ft.”

“Infrastructure is not adequate. This pushes up the cost, making the project unviable for many developers,” added Mitra.

Concurred Pankaj Kapoor of Liases Foras, a property research firm, “Locations like Panvel still lack the livability factor. You require human mass for infrastructure to come up and this may take another decade.”

He said the affordable homes market is relatively better than the luxury one. “Sales to inventory ratio is higher than the luxury segment. The current stock of expensive flats will take at least 100 months to sell. The affordable ones have an inventory of about 30 months, although ideally it should be about 11 months,” he added.

Builder Nayan Shah of Mayfair Housing, which builds luxury apartments in suburban Mumbai, branched out into the affordable sector a few years ago with a project in Virar. “There is good demand from people who want to sell their tenements in Mumbai and move to a larger, cheaper home further away from the city,” he said.

Developer Nayan Bheda of Neptune Group blamed the government for not promoting affordable housing. “Permissions don’t come in time and there is little support from the local municipality,” he said.

Pranay Vakil of Praron Consulting said many builders pre-sell the flats at a fixed rate during the construction stage itself. “But construction cost shot up by 23% in the last two years and this has hurt a lot of developers in this segment. Their margins have shrunk.”

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